Ricardo Spagni: Monero privacy attribution is a major misconception

Ricardo “Fluffypony” Spagni stepped back from active involvement in the privacy-focused cryptocurrency Monero almost a year ago, but he is still regarded as its unofficial face.

Spagni stood at the very origins of Monero, although he was not its direct creator. He is currently a South African programmer and entrepreneur more focused on Tari, Monero’s sidechain, a protocol for digital assets that carries information about ownership rights.

In an exclusive ForkLog interview, Ricardo Spagni discussed the main challenges facing the cryptocurrency industry, the misconceptions surrounding Monero, and how associations with illicit activity on the dark net influence the adoption of cryptocurrency.

ForkLog: In one of the episodes of Monero Talk, released shortly before the COVID-19 pandemic, you said that “cryptocurrencies are not yet ready to take their place in the sun.” Has the situation changed since then?

Ricardo Spagni: The biggest challenge is the usability problem. Storing and using Bitcoin is incredibly difficult. There is no difference whether you are a private individual or a company—the problem is the same for everyone. It would be foolish to ignore the fact that using cryptocurrencies requires substantial knowledge and skills.

Of course, we can impart this knowledge to people, but it can be likened to complex massively multiplayer online role-playing games such as EVE Online or World of Warcraft. There is a starting point where you begin slowly getting familiar with the dynamics of the game, and it would be naive to expect that you will immediately understand everything that is going on. At first you will have problems, especially when there are many players who have been playing for many years around you.

Not surprisingly, many people don’t understand Bitcoin right away. However, they overcome these barriers, but it happens not because they truly want to use it, but because they are interested in the potential price growth. This is the situation we are in now, though I think we are gradually approaching the moment when Bitcoin becomes more valuable from a consumer perspective. Solutions like the Lightning Network make some aspects of its use easier, but the fundamental user experience problem remains.

ForkLog: Periodically one can hear the view that too close a focus on Bitcoin’s price obscures its true value for society. Do you agree with this statement?

Ricardo Spagni: I completely agree. I have never liked too close an attention to the price. In fact, price is the least interesting aspect of Bitcoin, yet it overshadows everything else. This problem is inherent to all cryptocurrencies; the same happens with Ethereum: people talk about price but not about the technology. If they do touch on new features, it’s only in the context of how they might affect the price. There is no discussion of how these new features could be useful for end users.

I think it’s crucial to change this culture of thinking. In Monero we addressed this from the outset by banning discussions of price on Reddit. A separate thread was created for that. This separation extended to other networks: for example, there is an IRC channel where price discussions for Monero are conducted; in other channels such conversations are not banned, but they are not encouraged.

This is indeed a cultural aspect. Such questions need to be tackled at the outset and passed on as a tradition from existing users to newcomers. Of course, it’s a pity that such a tradition did not take hold in Bitcoin and Ethereum communities, but I think it’s not too late to fix. I would really like to see users trying to create traditions and devote more attention to the technologies themselves.

ForkLog: How did you become involved at the origins of Monero?

Ricardo Spagni: The advent of Monero followed the CryptoNote white paper, which looked very interesting to me. There were things similar to Bitcoin, but it also questioned some of its architectural decisions and proposed better solutions. I undoubtedly have enormous respect for what Satoshi Nakamoto created, but the reality is that his architectural decisions cannot be changed. Also, they were quite arbitrary: Satoshi did not explain why he chose that number or how he determined the emission limit. Probably it’s good that he settled on 21 million coins, because that number is magical in its own way, but I also think that revisiting his decisions would be useful.

That is exactly what was done in CryptoNote white paper. Some things there, of course, were not finished. For example, it talked about the Proof-of-Work algorithm, but there was no detailed description of how to achieve this.

One of the CryptoNote implementations was Bytecoin, but its problem was that 80% had already been mined via premine. I was not interested in it at all: practically, when a coin is almost all mined by the time it becomes widely known, it is either a blatant scam, or it’s simply irrelevant. Thus, although the white paper was interesting, one could not say the same about any implementation.

Monero — enfant terrible of the dark net or the final solution to the problem of cryptocurrency anonymity?

Bitmonero proved to be the exception. It was a fair reboot of Bytecoin, and it was interesting because around the project a community could be built. The launch went exceptionally well: there was a pre-announcement on BitcoinTalk, and binaries were uploaded for various operating systems.

I started mining on the very first day, but soon there were challenges as well: thankful_for_today, who created Bitmonero, insisted on certain things that others did not agree with, such as merged mining with Bytecoin. The community at that time was not very large, and when we realised that he would not give us the freedom to develop the project as we wished and veto his decisions, we decided to launch a parallel implementation.

I and six other people created our fork, and for a while Bitmonero and Monero worked in parallel as implementations of the same chain. But after some time thankful_for_today simply disappeared and stopped updating the code, after which Monero effectively became the main implementation.

ForkLog: What role can Monero with its unique privacy features play in the future of the industry?

Ricardo Spagni: Undoubtedly, Monero stands out for its privacy, but I cannot say whether it will remain the dominant coin in this segment. In fact, it doesn’t have to be. The main point is that Monero managed to draw attention to the lack of privacy across the ecosystem, and the too little attention given to these issues. This is valuable in itself.

Of course, like many other cryptocurrencies, Monero has issues with user interaction, but many projects are working on solving them. There are also entry-barrier issues, e.g., after receiving XMR you cannot spend it immediately. But this is also one of the privacy features.

Moreover, Monero has become a catalyst for a lot of privacy research, e.g., Range Proofs. And when someone builds applications, they evaluate how their solution lines up with Monero’s technology. There is also research in other areas, e.g., new payment patterns on top of the main network. These include atomic swaps and Lightning on Monero.

ForkLog: At what stage is the Lightning Network integration in Monero?

Ricardo Spagni: Tari Labs and several other projects are driving the work on this. A few key elements were added to the Monero codebase, but deploying Lightning remains a major challenge. For example, to use Lightning in Monero, certain privacy considerations have to be revisited, as the amount being sent into a channel becomes visible.

The main dilemma is whether we create a full subsystem where the quantity of coins sent can be revealed and then hidden again after the channel closes, or whether we focus on atomic swaps that can be integrated directly into the Lightning channel. But if there are several ways to implement it technically, the bigger challenge is user perception. It would be great if a user could be online in the Lightning network in a matter of moments.

There are already centralized services like XMR.to, supporting Lightning payments, but of course we’d like to see more decentralized solutions. The user must remain the priority: they should not have to think about how it works, they should simply know that it works.

ForkLog: Monero is often almost synonymous with criminal activity, especially when it comes to its use in the dark net. Does such a questionable reputation hinder broader cryptocurrency adoption, especially in light of rising delisting XMR from exchanges?

Ricardo Spagni: Undoubtedly, this is disappointing, but fundamentally it changes nothing. Cash is used in illegal activity everywhere, but no one suggests stopping using it just because a particular 100-dollar bill was once in the hands of criminals.

Monero certainly faces a challenge because privacy tools are used not only for illegal purposes. They are used by informants and investigators, journalists who must deal with anonymous sources, or people disclosing government secrets. And you cannot simply say that journalists and informants may use them while others cannot just because we disagree with what someone does, or think it is bad. Morality cannot be placed into a piece of computer code, because code has no emotions.

Take, for example, a car. You can buy a car and use it to commit terrible things: in a crime or terrorist act, or to drive into a crowd of protesters. Should the car’s manufacturer take any action to prevent its use for criminal purposes?

ForkLog: Name the most common myths surrounding Monero.

Ricardo Spagni: The biggest myth, the greatest misconception, is the untraceability of Monero transactions. It is not hard to “hack” Monero privacy based on wallet analysis. Moreover, even in the case of a perfectly private cryptocurrency that does not exist, one can take transaction details and publish them on Facebook or any other social network.

For this reason there is no private cryptocurrency or private transaction that could not be made public. Privacy itself is a misconception. Yes, Monero provides good privacy, but there is always a risk that it will be compromised. Moreover, any transactions are forever stored on the blockchain, and here arises another question: do we really want something that could be decrypted in the future?

Another widely held misconception is Monero’s centralization and my role in the project. Some people even call it Fluffyponycoin. I am not the founder; I am not even the chief maintainer, and one can safely say that Monero is a living organism. I did not participate in the latest releases, I did not decide anything and did not upload any files. And if tomorrow I disappear, everything will continue without my involvement.

ForkLog: Not long ago the community heatedly discussed Ethereum’s issuance cap and the discrepancies of this metric across sources. During these debates you wrote on Twitter that anyone can independently verify Monero’s emission, thereby underscoring the importance of full nodes.

Independently verifying the supply of Monero is trivial. pic.twitter.com/wA9Og7r4Zb

— Riccardo Spagni (@fluffypony) August 8, 2020

Ricardo Spagni: The ability to determine the current emission is only one aspect. More importantly, it is the culture where users want to run their own nodes. Yes, people like light wallets, and there is nothing wrong with that. But full nodes are crucial for decentralization, and many Monero users are indeed its holders. In fact, the official Monero wallet is already a full node.

ForkLog: How decentralized is Monero in reality?

Ricardo Spagni: This can be determined at least by the development process and user involvement, and the Monero community is among the largest. This is one of the key components because if, say, a mining pool suddenly obtains too large a share of the hash rate, the community will notice, and miners will start leaving that pool. The same can be said for requests to include code — they are considered by a large group of people.

In general, decentralization cannot be achieved technically; it is achieved at the cultural level, and ideologically the Monero community has always strived for decentralization.

ForkLog: What role do you currently perform in Monero?

Ricardo Spagni: I remain a maintainer, I study code inclusion requests and participate in all major discussions, but my main attention is on Tari and what benefit it can bring to Monero.

ForkLog: What prompted the decision to start working on a new project?

Ricardo Spagni: One of Monero’s biggest challenges is that we want transactions to be uniform in structure. This means no possibility to store additional data. Bitcoin, for example, is structured slightly differently: there you can implement various solutions, e.g., Bitcoin Scrypt, colored coins, etc. In Monero it’s impossible because it would require adding data that could negatively affect the privacy of transactions.

That is why I started thinking about layer- built solutions on top of Monero that would not require embedding extra data. At some point I considered MimbleWimble, which offers greater scalability than Monero, but in its normal form it lags in terms of privacy.

Ultimately we created a solution on the base layer that would allow moving assets between Monero and Tari and back. We hope to offer new options, balancing privacy and scalability.

The ultimate goal is to create a decentralized protocol for digital assets. Colored coins, ERC-20 tokens, Counterparty-based assets—Tari as a Monero sidechain is capable of supporting all these mechanisms.

ForkLog: What use cases are proposed for Tari-based digital assets?

Ricardo Spagni: We focus on native digital assets, including loyalty points, tickets, in-game assets, security tokens and digital-rights management (DRM). The latter is particularly interesting. If you recall, last year Microsoft closed its bookstore, after which users lost access to purchased e-books.

From a digital rights perspective, this is unacceptable because people bought books with the expectation that they would always have access to them. The same applies to music, games, software, and we see examples more and more often. For example, today it’s not hard to play an old game for MS-DOS, but if we talk about Windows XP-era games, activation services are gone and you have to resort to various hacking tricks.

Therefore, speaking of digital assets, I think it would be great to have the ability to acquire a book, a movie, music or a program via a token issued on a Tari-like protocol. And you could use this forever: the company that licensed it could cease operations, but you would retain a DRM token on a decentralised protocol. In this sense, digital assets offer very big opportunities.

ForkLog: When can we expect Tari’s mainnet launch?

Ricardo Spagni: I don’t have an answer yet. The testnet is currently in a very limited state: you can perform normal transactions with Tari coins, but we have not yet reached creating digital assets. I think at least six more months are needed before we can start experimenting. As a community we do not yet have confidence in the testnet’s stability, and when you launch the mainnet you are responsible for users’ funds, and there is no going back.

ForkLog: You have been listed as one of the main speakers at the Hacker Congress in Prague at the start of October. What main idea do you want to convey to the public?

Ricardo Spagni: I very much want to help people understand the importance of solving user experience problems, especially regarding privacy. Having a certain ideology and thinking about privacy is, of course, good, but the task is not to provide privacy for just oneself. It must be provided to a broad group. Otherwise, the transaction pool will be very small, and the bigger that pool, the easier it is to get lost in it. That is why user experience matters so much.

Also I want people to understand that privacy is not simply a technology. Its essence lies in how we perform certain processes and ensure operational security. No technology can magically solve this problem, but technologies can foster a natural reaction to the need for privacy.

Brought to you by Andrew Asmakov

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